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Americans' outlook for US economy declines to four-month low

Americans' expectations for the economy sank to a four-month low in September as households fretted about financial markets and a global economic slowdown.

PHOTO: AFP

[WASHINGTON] Americans' expectations for the economy sank to a four-month low in September as households fretted about financial markets and a global economic slowdown.

The measure tracking the economic outlook declined to 44.5 this month from 46 in August, data from the Bloomberg Consumer Comfort Index showed Thursday. The weekly sentiment gauge, which includes current views of the economy, personal finances and the buying climate, dropped in the period ended Sept. 13 to the second-lowest level since November.

The smallest share of respondents in a year said the economy was getting better, probably a reflection of the slump in stock prices since mid-August. While households were more downbeat last week about the buying climate, Federal Reserve officials may view recent gains in retail sales as a sign that falling gasoline prices and a stronger labor market are underpinning demand.

"Worries about the national economy come as the Fed approaches decision time on interest rates," says Gary Langer, president of Langer Research Associates LLC in New York, which compiles the comfort index for Bloomberg. "While gas prices have fallen 34 cents since mid-August and unemployment is its lowest since 2008, wage growth remains stagnant and stock market volatility continues domestically and internationally alike."

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Some 36 per cent of respondents said that they believe the economy is getting worse, the highest share in four months, while 25 per cent said it was improving, according to the monthly expectations gauge. The weekly measure of the state of the economy dropped to 30.9, the lowest level since the period ended July 26, from 33.3.

The buying climate index decreased by 1 point to 34.9, the weakest reading in three months, even as Americans pay less at the gas pump and the costs of other goods and services remain subdued. Prices paid by American households fell in August, a report from the Labor Department showed Wednesday.

A measure of personal finances was little changed at 54.9 last week, compared with 55.1 in the prior period.

Those 18 to 34 years old were the most pessimistic since November, while Americans aged 45 to 54 were more upbeat than at any time in the last two months, the report showed.

Sentiment worsened in all four regions, with attitudes in the Midwest and West declining to the lowest levels since September and November 2014, respectively. While confidence fell the most in the Northeast last week, the region's households were still more upbeat than those in the rest of the US.